95. In Chapter 3 we outlined the likely impacts
of climate change. We noted that there is considerable uncertainty
about these impacts and when they might occur. We also noted that
some of them will be reduced in terms of impact because of automatic
("autonomous") and managed adaptation. We urged that
more attention be given to adaptation strategies in the face of
realistic risks that the world will not act fast enough or on
a sufficient scale to prevent impacts occurring. But other impacts
are not subject to adaptation and this will be especially true
for the low probability but singular irreversible events such
as reversal of the thermohaline current. While impacts can be
expressed in terms of individual events and their probable magnitude,
it remains the case that some overall summary indicator is needed.
Chapter 3 briefly investigated the estimates of "population
at risk". But, ideally from a policy standpoint, the relevant
indicator should bear comparison with the costs of control. This
is why the monetised benefits of control are attractive indicators,
however difficult they are to produce. We turn to the evidence
on monetised benefits.

98. So, if we take, say, the Nordhaus estimates,
these tell us that for a +2.5oC warming one might expect
to see global damage amounting to 1.5-1.9% of world GNP. However,
in Africa that impact might be closer to 4% and in India 5%. The
scale of the aggregate impacts reflects (a) the geographical incidence
of warming and associated weather events, (b) the variable vulnerability
of the economies of developing nations to these impacts, and (c)
the smaller GNP of the relevant countries. Finally, Table 10 shows
estimates for damages only. Controlling climate change will avoid
some (not all) of these damages, but it may also bring other benefits
known as "ancillary benefits". For example, if CO2
emissions are controlled through traffic restraint, then congestion
might ease and there will be benefits from the reduced congestion,
better local air quality, and so on. It is generally accepted,
though not by all economists, that these ancillary benefits can
be added to the reduced global warming damages when conducting
a cost-benefit analysis. Moreover, there will be some additional
costs too, due to the dynamic effects of diverting expenditures
towards climate control and away from other uses of resources.

99. Table 10 suggests that, in terms of percentages
of world GNP, damage is relatively low, even for +2.5oC.
The damages are not evenly spread. In general, developing countries
lose more than developed economies. Some models suggest no real
net damage to rich countries.

100. The monetised estimates do not seem to be consistent
with the more alarming pictures of global warming damage painted
in much of the scientific literature. However, only crude efforts
are made in some of the models to account for impacts such as
thermohaline reversal etc. Most of the models make no effort to
account for large-scale singular events. The estimates are also
benchmarked on a doubling of CO2 concentrations relative
to pre-industrial levels, i.e. on approximately 550 ppm. Damages
will be larger if concentrations are permitted to go beyond this
level. Finally, average world damages conceal the bias in the
damages towards developing countries. Rich countries may still
wish to act to prevent damage to these countries even if they
might suffer little damage themselves.

101. The evidence presented to us indicates that these
estimates of monetised damage are highly controversial within
IPCC deliberations. Indeed, we note that in the 1995 Second
Assessment Report, damages and benefits were afforded a separate
chapter in the report of Working Group III. In the Third Assessment
Report of 2001 the monetary estimates are confined to a sub-section
of Chapter 19 of the report of Working Group II. That chapter
is intended to be a summary of other chapters, but the monetary
damage estimates are introduced there for the first time. Moreover,
there is no discussion at all of the estimates in the 2001 IPCC
Synthesis Report. It appears to us that the IPCC has made
a conscious effort to downplay the economic approach to measuring
damages. We acknowledge, as does IPCC, that these estimates are
uncertain. But it is hard to justify the minimal discussion of
the estimates on this basis since all the IPCC Reports contain
detailed discussions of various non-monetised impacts that must
be equally uncertain. We urge the Government to press the IPCC
for a proper detailing of the estimates and a discussion of the
uncertainties in the next IPCC Assessment Report in 2007.
Brief inspection of the plans for that report does not provide
encouragement. According to the outline on the IPCC's website,
there is to be no discussion at all in 2007 of the "integrated
assessment" models and the estimates of damage costs are
given even less space (in Chapter 20 of WGII and
Chapter 2 of WGIII).

102. In his evidence to us, Dr Terry Barker of Cambridge University
confirmed that some past controversies on monetary valuation have
made the IPCC nervous of monetised damage estimates. In particular,
he noted that monetised values of "human life"more
strictly, what people are willing to pay to reduce risks to life
and limbwere widely criticised[84].
We can see why such procedures would appear controversial, especially
as "willingness to pay" will be constrained by income,
making the life of someone in a poor country appear less "important"
than a life in a rich country. But placing money values on life
risks is in fact commonplace, and is part of the Government's
approach to cost-benefit appraisal of regulations and of major
investments in transport and in health and safety. No government
treats life risks as if they should be zero. Hence costs and risks
are traded off on a regular basis. If the argument is not about
monetising the risks but about the inequality of the valuations
used, then it is possible to have more sympathy. But the procedures
for "equity weighting" described above go a long way
to correct this basis in the use of a willingness-to-pay metric.
Whatever the rights and wrongs of these arguments, we are concerned
that, by trying to avoid controversy, the IPCC is not facing up
to the realities of making choices. If nothing else, economics
forces those choices into the open.